Why Nvidia Stock Rallied to a Record High Monday Morning

Nvidia (NVDA 4.93%) stock hit a new all-time high Monday morning, shaking off its mid-December slump and jumping as much as 5.3%. As of 1:19 p.m. ET, the stock was still up 4.7%. There were a couple of developments that sent the artificial intelligence (AI) chipmaker higher, as shareholders eagerly await an update from the company's rock star CEO. Kicking off CES CES is one of the biggest tech-focused events in the world. The annual trade show brings together many of the latest developments in technology and features some of the industry's biggest names. Nvidia CEO Jensen Huang is scheduled to kick off the event Monday evening by delivering the highly anticipated keynote address. Huang is expected to provide insight into the state of AI adoption and demand for Nvidia's recently released Blackwell processors, and potentially provide details about its upcoming Rubin platform. There are also rumors Huang could announce the development of an AI-centric CPU. Excitement about Huang's appearance notwithstanding, Nvidia shareholders had other reasons to be enthusiastic. Global electronics company Hon Hai Precision Industry, more commonly referred to as Foxconn, announced yesterday that robust demand for AI-centric servers fueled record fourth-quarter results and management expects its growth spurt to continue into the first quarter. Nvidia supplies Foxconn with many of the graphics processing units (GPUs) used to power AI in its cloud and networking devices, which bodes well for the chipmaker. Is Nvidia stock a buy near a new all-time high? The evidence suggests that the adoption of AI is still in the early stages and Nvidia is a pivotal player in the space. It might seem expensive at 59 times earnings, but looking ahead, Nvidia is selling for just 34 times next year's expected earnings, a much more palatable multiple. Furthermore, for the past 10 years, Nvidia has traded for 59 times earnings on average, which suggests that the stock isn't really that expensive from a historical perspective. The AI market is expected to be worth as much as $15.7 trillion by 2030, according to Big Four accounting firm PwC, which also suggests that "AI is still at a very early stage." Given its critical role in the advances in AI, I'd say that makes Nvidia stock a buy.